Most B2B suppliers play the Custom Game by negotiating discounted deals with individual customers amidst heavy competition. They price to competition because the market lacks large customer segments, common price structures, and standard product configurations.

It is critical to tightly control discretionary discounting and ensure that the sales force and the customers feel that the pricing process is fair. Your path to growth depends on:

• Establishing a target pricing formula: This usually involves anchoring on the underlying interrelationship between price and deal volume (the Natural Volume Slope) and using specific market adjusters.
• Tracking sales discretion: The difference between net prices and target prices can reveal valuable information on market trends and sales performance.
• Incentivizing the sales force on revenue and price discretion: This keeps sales focused on “revenue quality” instead of primarily on margins or volume.

One key to resilience in the Custom Game is the ability to use surcharges to offset externally driven cost shocks that affect the entire market, not just you.